The district is one of the Russia’s most picturesque. It unites Dagestan, Ingushetia, Kabardino-Balkaria, Karachayevo-Cherkessia, North Ossetia-Alania, Chechnya and the Stavropol region. The magnificent scenery of the mighty Caucasus and the near-perfect climate could have made this region Russia’s tourist hub.

Regular reports of violence and militant attacks in the region keep travelers and most investors away. Flourishing corruption is not helping either. Although it is a common disease throughout the vast country, in the North Caucasus it has reached the level of “a threat to national security”, according to President Medvedev.

Seeking to improve the situation, on January 19 this year Dmitry Medvedev created the new North Caucasian district. Following a counter-terrorist regime of over ten years, which did not put an end to violence in the region, the Kremlin decided to rethink its policy and apply a different approach. Instead of use of force, more profound economic methods are coming to the fore. A successful businessman – a former banker and board chairman of Norilsk Nickel – Aleksandr Khloponin was picked for the post of presidential representative to the new district.

­“Terrorism is a disease”

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Commenting on the most worrying issue – terrorism – the official cited President Medvedev as saying that law enforcement agencies have been actively combating it “and it’s safe to say this work has been a success, with results tangible indeed”. In other words, he added, “we have become stronger”.

Militant attacks keep hitting the region – the most brazen one was against the Chechen parliament in October. According to Khloponin, “There is perhaps no technology available in the world to solve all the problems.”

“The system of combating terrorism is very complex, so we are learning, also from our mistakes,” he added. “Much work is underway and each time we improve performance. At the same time, let me emphasize this – without the support of the population it is impossible to solve the problem. One can’t fight the consequences, but must fight the causes, while the causes are mostly social,” he said.

Khloponin pointed out that using only force in addressing the problem of terrorism in the region “is next to impossible”.

“Attention should be focused on the fact that terrorism is a disease, and rather a social problem, echoed from the situation in the North Caucasus,” he said.

Khloponin, who is also a vice premier, admitted that there is a huge layer of social problems in the region. There is deep poverty and a high unemployment rate on the one hand and a very good demographic situation on the other. “We have an ever growing number of young men who eventually can’t find ways for self-realization and become potential candidates for terrorists and extremists recruited through false ideologies,” Khloponin said.

The solution here lies in the development of local economy, creating more jobs, fighting poverty, development of new projects and technology, he said. Adopting a balanced policy on young people is yet another direction of work.

Among the tasks set by the president, Khloponin pointed out, is to speed up the process so that “real results” of the efforts could be seen from next year.

Khloponin, the faction’s Supreme Council’s member, also sees this among his personal tasks as the envoy to the North Caucasus.

“I have an odd function now of a messenger from the Caucasus with a mission to proclaim it is our territory, of Russia – unique in its beauty, nature and people, traditions, culture – that in its time faced turmoil and war in which a huge number of citizens have died, regrettably,” he said. It does not mean, Khloponin went on, that “we should avoid speaking about it and make it an integral part of Russia”.

This territory was neglected due to certain circumstances “in terms of time and economic development, education and so forth”. But now, Khloponin said, it is high time to radically change the situation in the Caucasus.

“There are brilliant people there, so we should be given opportunities to live and work there. This is what I am trying to convey to all,” he stated.

According to the vice premier, unless we make ourselves aware that the North Caucasus is the territory of Russia – interesting, beautiful, unique – “I’ll never be able to attract an investor who would revive the economy of this territory”. If we do not want to develop the region, “we cannot expect to get any support from the West”.

­Chechnya plans to become mountain skiing center

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While investors are still tossing around the idea of turning the North Caucasus into Alpine ski resorts, the state seems rather devoted and ready to take risks.

“The state is ready to invest in the infrastructure and grant tax preferences to regions where this direction is going to be developed,” Khloponin said.

Currently the plan is to build four large ski resorts in the North Caucasus: Manison in North Ossetia, Matlas in Dagestan, Arkhyz in Karachayevo-Cherkessia, and Elbrus in kabardino-Balkaria. However, Chechnya is not going to lag behind and is now working on its own project to develop mountain skiing.

“As soon the project is ready for the Chechen Republic and there are realistic offers, we’ll be ready for them,” Khloponin assured.

An ambitious goal voiced earlier by a keen skier, Premier Putin, was turning the North Caucasus into a resort capable of hosting up to 100,000 tourists.

Seeking to convince foreign businesses to invest money in the region, Moscow is generously pouring in budget finance.

According to Khloponin, the government has made “an unprecedented decision” to allocate guarantees worth 50 billion roubles for investment programs.What that practically means, he explained, is that the state takes 70 per cent of the investor’s risks while investors risk only 30 per cent.

Still, not completely recovered from the consequences of the financial crisis and not quite confident that pouring money in would yield fruit, investors are not yet queuing up. But no risk, no champagne. And some businesses have already shown interest in the idea, including Credit Suisse investment bank, and investors from the United Arab Emirates.